Japan Airlines Reports $1 Billion Loss in First Quarter
Thursday, August 13th, 2009
As a result of the swine flu epidemic and the reduced demand for travel around the globe, Japan Airlines is among several international airlines that is reporting a significant loss for the first quarter of 2009. Japan Airlines Corporation reported a $1 billion loss for the first quarter, a drop of approximately 32 percent since the same time last year.The airline has experienced a significant drop in travel demand in both its domestic and international routes, and has made attempts to recover by restructuring flight routes, downsizing its workforce and restructuring its labor force, cutting out two of its major routes, reducing flight frequency to major destinations, and limiting extra expenses. However, its cost-cutting efforts are not paying off and revenue numbers for this fiscal year continue to look bleak.
According to a report in the Wall Street Journal, the air carrier posted a larger loss than was expected, and the losses for the second quarter appear to be much wider than the same period last year. The airline has received government assistance totaling ¥100 billion to assist with its operation costs, but the airline continues to struggle. Even while cutting major costs and restructuring operations, the airline has experienced a steady drop in revenue as demand for both business and cargo transportation has declined significantly in the wake of the economic downturn.
Fewer international passengers have been booking flights with Japan Airline and other international airline operators in fear of the swine flu epidemic, and expects have yet to determine when the 'red alert' status for the swine flu will cease. However, the airline expects leisure travelers to return to their regular schedules as soon as the swine flu fears subside. The airline is hoping to stimulate demand in leisure travel by reducing fuel surcharges.
The airline has reported an operating loss of ¥86.1 billion to date.
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